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On Thursday, Globus Medical Inc. (NYSE:GMED), a medical device company with a market capitalization of $12 billion and an "GREAT" financial health rating according to InvestingPro, reaffirmed its commitment to expanding its market reach with the definitive agreement to acquire Nevro Corp (NYSE:NVRO) for approximately $250 million. The acquisition, which represents about 0.6 times the forecasted sales for the fiscal year 2025, marks a strategic move for the medical device company as it ventures into the neuromodulation and pain stimulation market.
Globus Medical’s acquisition of Nevro Corp, which is not currently rated, comes as a surprise to many investors, especially considering the company’s recent major acquisition of NuVasive (NASDAQ:NUVA). Despite the unexpected move, analysts from BTIG consider the purchase a low-risk investment given the relatively small cash outlay. The acquisition is seen as an opportunity for Globus Medical to diversify its portfolio and strengthen its position in the $3 billion total addressable market for SI Joint Fusion Systems, where it previously had limited exposure.
BTIG analyst Ryan Zimmerman supports the strategic rationale behind the acquisition, pointing out that Globus Medical stands to benefit from Nevro’s complementary assets. Among these is the Nevro1 SI Joint Fusion System, which aligns with Globus Medical’s existing product offerings and addresses an area where the company was previously underrepresented.
Furthermore, the potential for cross-selling opportunities is significant. Globus Medical could leverage Nevro’s pain stimulation channel to promote its imaging technologies, such as the Excelsius3D, thereby enhancing the value of its enabling technology ecosystem. This integration is expected to support patient care continuity, extending from initial back pain management to surgical intervention and post-operative recovery.
From a financial perspective, the acquisition is anticipated to be accretive to Globus Medical’s operating profit by fiscal year 2026. The company’s strong financial position, evidenced by its impressive 102.1% revenue growth and healthy current ratio of 2.51, positions it well for this acquisition. BTIG’s analysis suggests that Nevro could contribute between $35 million to $40 million in operating profit in FY26, following expected reductions in operating expenses within Nevro. According to InvestingPro, the company operates with a moderate debt level, with a debt-to-equity ratio of just 0.13, providing financial flexibility for strategic moves.
In light of these considerations, BTIG analyst Zimmerman has reiterated a Buy rating on Globus Medical stock with a price target of $91.00, reflecting confidence in the company’s growth trajectory and the anticipated benefits of the Nevro Corp acquisition. The stock is currently trading near its 52-week high of $94.93, and InvestingPro analysis indicates the stock is fairly valued based on its proprietary Fair Value model. Investors seeking deeper insights can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers, which includes detailed analysis of Globus Medical’s financial health, growth prospects, and peer comparison.
In other recent news, Globus Medical has been in the spotlight due to its acquisition of Nevro Corp. for an equity value of approximately $250 million. This strategic move has triggered Stifel to maintain a Buy rating for Globus Medical, despite the EPS midpoint for 2025 being revised approximately $0.20 lower due to the transaction. Canaccord Genuity has also maintained a Buy rating on Globus Medical shares, increasing the price target to $101 from the previous $92, following the company’s announcement of surpassing both Canaccord Genuity’s and Street estimates for the fourth quarter of 2024.
On the other hand, Truist Securities has maintained its Hold rating on Globus Medical stock, keeping a steady price target of $90.00. This stance came in response to the company’s preliminary fourth-quarter revenue results and its initial guidance for the year 2025. BofA Securities analyst Craig Bijou upgraded shares of Globus Medical from Underperform to Neutral and increased the price target to $97 from $80, after the successful integration of NuVasive.
These recent developments suggest that Globus Medical’s strategic moves and financial performance have been met with varying degrees of optimism from analysts. The acquisition of Nevro Corp., the successful integration of NuVasive, and the company’s strong financial performance are all factors that have influenced these ratings and price targets.
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